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The Edmonton Oilers are a good example of how a small Canadian market with a high level of interest in hockey can be a better location for a team than a large American city whose residents have only a middling level of interest in the game. All else being equal, a team located in a big American market such as Phoe- nix, Miami or Atlanta should have nothing but ad- vantages when compared to a small-market Canadian team. But all else is not equal. A Canadian city of just over one million has far more hockey fans than a Sun Belt city of more than four million. (See Table 4)

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Our analysis controls for the border and we come to a different conclusion: a team’s ability to generate revenues correlates strongly with the population of its home market—so long as you control for the presence of the Canada-US border.

Toronto is a more profitable market than Ottawa and New York is a more profitable market than Buffalo. But a small Canadian city the size of Edmonton is a more profitable market than a big Sun Belt city the size of Atlanta. Levitt, in effect, concluded that because Edmonton is a more profitable market than Atlanta there is no correlation between the size of a city and its profitability; instead he should have concluded that being a Canadian city—even a small one—makes a team much more likely to be profitable.

Consider:
• Canada’s six NHL teams are only one-fifth of the NHL’s 30 fran- chises—yet Canada generates nearly a third of the league’s rev- enues.
• Edmonton, Calgary and Ottawa are three of the smallest markets in the NHL, yet these franchises enjoy arena gate revenues that exceed almost every American franchise.
• The rights to broadcast NHL hockey are the most important deals in the Canadian television market. In the US, the NHL does not even have a proper national network TV deal.

Oh ya, and the rinks in Montreal, Toronto, Ottawa, and Vancouver were built by private investment.

Don't be so naive to think this is as simple as a 'progress v no progress' issue. Scary when uninformed people buy into simple, manipulative P.R. Without the benefit of looking deeper into the heart and reality of the issue.

Quote:

Originally Posted by raab

Scary when you realize that all the owners that built rinks were forced to sell and declare bankruptcy. Yea, that's a model I want to see the Oiler's owner taking. And what about a big city with hockey interested fans? I can almost guarantee a team goes to Seattle if they build a new arena.

Quote:

Originally Posted by Peter Zezel

A lot of other factors contributed to Ottawa and Vancouver's owners having to sell. The loans for Scotiabank were called in because Enron croaked and they didn't have the capital to pay them right out. Vancouver had overruns on the arena, lost revenue on the 94 lockout and paying the expansion fee for the Grizzlies might have tipped the pot. Building a rink was not the reason for the bankruptcies and shouldn't scare off people wanting to build arena's privately.

Building the arena is exactly what this city needs, but I don't agree with the financing. The way I see it, Katz can pay for the arena and the city can pay for the infrastructure. I'm not Katz, but I would like to think if I was in his position I would try and get the financing privately to build this arena for my hometown.

I understand owning a NHL franchise is not some hand over fist money generating machine and he has already helped Edmonton out by buying the Oilers. However, end of the day if this arena gets built that value and asking price for the Oilers increases to Katz benefit.

Quote:

Originally Posted by Replacement

Nice post.

You could go into a lot more detail I'm sure but you captured the argument. Some confusion abounds around events, results, and retrospection which leads to fictions commonly being created around this issue.

For instance the notion that funding arena's causes its owners to go broke. While people may or may not be invoking causality in that interaction they most clearly are arguing on that behalf as if its something an owner should steadfastly avoid lest they succumb to going broke on the basis of partially funding an arena.

Heres an instance where the pro arena at any cost side is clearly utilizing fear mongering as a means to try to sway favorable opinion on any nature of deal.

Katz will not go broke on the basis of contributing an extra 50-100M on an arena. An owner with multibillion in assets that has recently leveraged a subtantial amount of that into liquid assets through sales is arguably in a position to not only fund an arena, but do so without loan (not recommending this as a course of action, just saying)

Nobody at this point is looking at a massive change in relative contribution. But for Katz to go 50/50 with the city to make up any outstanding amount that is owing is feasible, and lets make it clear, Katz could easily enough do that if he wished.

Aside from what the Katz team itself may say through vested interest about "losing money on the Oilers" (theres no independent substantiation of this and none provided even though the city has asked several times) its quite clear that this becomes a matter of how much, or if, Katz wants this development to continue.

The request for a 6M/yr subsidy in an already one sided deal gave indication not too long ago that Katz was not bargaining in good faith.

It is curious why it falls on the city to fund and front each extra means as shortfalls come up. I could add shortfalls that are now increasingly politically unpalatable to fund due to specific actions Katz and his team have taken, which have been recently outlined on this thread.

Quote:

Originally Posted by I am the Liquor

Is that right?

Quote:

Originally Posted by raab

Well if I'm Katz and I'm not getting the arena I'm selling off the Oilers and putting my money into a better investment. Or I'm building my own arena in one of the surrounding counties like strathcona, parkland, or sturgeon for significantly cheaper and letting edmontons downtown rot.

Quote:

Originally Posted by Replacement

So perhaps you're engaging in projection here rather than accurately reflecting the present deal, and issue at hand.

Its unfortunate you have this opinion, and I'm not sure how its derived, but it seems quite negative.

Quote:

Originally Posted by Billybaroo

Well, considering he owns a bunch of that land adjacent to the arena and stands to profit off it big time if his little extortion attempt is succesful, I really doubt that is in his playbook.

Quote:

Originally Posted by raab

Not exactly but close, Molson was forced to sell 80% of the Canadians to Gilette in 2000 which they bought back in 2009. And John Bitove who started the ACC in Toronto ended up selling the raptors to MLSE. It should be noted that the teachers union who was a 66% stake holder in MLSE sold in 2011 to Bell and Rogers.

Quote:

Originally Posted by raab

Have you not seen how this deal has been mismanaged on city councils side as much as Katz's side? Or how the citizens of Edmonton continue to ***** about how they're getting screwed over by a billionaire. If I'm Katz and this doesn't go through I build in the out lying area and have a half decent facility worth around roughly 250M. Then I don't have to deal with city council, and I'm not called a thieving billionaire for the rest of my life by half of edmonton. The best part is that if he did build an arena that the city would probably build and LRT line out to it worth 200-300M.

Quote:

Originally Posted by raab

What land does he own adjacent to it? I had heard that he had only bought the land for the arena district.

Quote:

Originally Posted by Section337

In my opinion, the Oilers are the smaller part of Katz's investment concerns, it's more about the real estate development around the arena, than the team inside of it. Selling the team means he is accepting a lot less profit than opportunity presenting itself.

And so, I think this is where they need to be looking for the extra capital. Since, I don't like the concept of certain private industry gaining competitive advantage over other private industry through actions of a government, those who look to benefit in the long term should do so with additional offsetting payments. Don't be taxing those people who have started building, before an arena is off the ground, charge those who are waiting until that competitive advantage is in place. Which is a group larger than Daryl Katz.

New hotel, anchored by arena, is built, it is required to charge a $5 a night surcharge (not charged at the Delta or Sutton Place...) on each room for ten years. New business tower, anchored by the arena, is built, each square foot of leased space has a surcharge for the first term. I'm sitting in a shiny new seat, in a building that I think I can escape from in the case of an emergency, I pay $N per ticket for N years...

Quote:

Originally Posted by Tarus

Owners in Ottawa were already broke by 2002 trying to keep up with the arena debt payments while dealing with a hostile government at the time. The Enron scandel was just the straw that broke the camels back, not the cause. They owed 360 million dollars, 200 million of it on the arena when they went under.

Montreal is harder to nail down due to how long ago it was, but poor on ice results, inability to fill the brand new arena, a bottomed out Canadian currency, and poorly run internal financials all played a major role in the Molson brothers selling the majority stake. Add in that there were no local owners, and the team was barely breaking even, there was a very real possibility that the Canadiens wouldn't keep playing in Montreal at the time.

You can't really pin it on the arena itself, but it does show that no franchise is safe if the economy drops off again.

All three situations are very much cautionary tales for anyone who is looking to protect their financial investment over the long haul(10 - 30 years), which Katz has been doing right from the start.

Not sure why people get so down on Katz anyways, he's a billionaire businessman looking to get the best deal possible for himself. If anyone has a real issue with the deal, they should take it up with their publicly elected officials who have spent the majority of the negotiations working for Katz instead of representing their electorates, it's like hating Horcoff for the contract the team offered him.

Quote:

Originally Posted by Beerfish

Nice interesting bit about the Brooklyn arena that Mandel and the crowd were visiting the other day. They were talking about all the planned development around the arena and how it was supposed to be on a 10 year schedule....which then got pushed back to a 25 year schedule. And thus all the 'promised' development looks like vapor ware. They also said for the Edmonton deal they have no time table at all and no independant person to oversee and make sure things are going as promised.

Scary when you realize that all the owners that built rinks were forced to sell and declare bankruptcy. Yea, that's a model I want to see the Oiler's owner taking. And what about a big city with hockey interested fans? I can almost guarantee a team goes to Seattle if they build a new arena.

This has been pointed out so many times that I cant believe anyone still brings up Seattle as a potential destination but the deal there is infinitely worse than what he would be getting in Edmonton. Maybe he could sell the team to a Seattle based interest but owning it makes no sense when he wouldnt get all the extra revenue that he's getting in the Edmonton Arena, he'd be a second tenant and getting a worse lease deal, and he'd be at best the third or fourth major sports team in the area and unable to charge what he gets for tickets here.

Seattle isnt a legitimate option, it's a boogeyman brought out to threaten people who dont realize the situation has changed since Pocklington owned the team. Katz is likely better off in Edmonton paying twice what he is now committed to than he would be moving to Seattle.

Feel if this arena was really essential for Mr. Katz, it would've been started long ago. If he doesn't care (Mr. Katz being the sole beneficiary/controlling 100% of the operating profits) why should the city.

Put it on the backburner and pay no attention to if for a few years and watch his response.

Feel if this arena was really essential for Mr. Katz, it would've been started long ago. If he doesn't care (Mr. Katz being the sole beneficiary/controlling 100% of the operating profits) why should the city.

Put it on the backburner and pay no attention to if for a few years and watch his response.

I would have immediately shelved it once he pulled the Seattle thing and then tried to ask for more cash to operate it. I would have then told the Katz group to come back to us when you have a few ideas as to how to over come this 100 mill shortfall and tossed the whole thing in his lap.

Unfortunately the mayor sees this as his big legacy project and will do anything to get it going and some of his top ambitious council henchmen like Krushell are on board.

It's amazing that the city is doing just about everything in this process with the occasional fly by duck shoot by the oilers and the city and council is being lambasted by arena supporters for their inaction. People supporting the arena should be throwing rose petals at the feet of this mayor and this council. They have don't just about everything possible to make this work.

This has been pointed out so many times that I cant believe anyone still brings up Seattle as a potential destination but the deal there is infinitely worse than what he would be getting in Edmonton. Maybe he could sell the team to a Seattle based interest but owning it makes no sense when he wouldnt get all the extra revenue that he's getting in the Edmonton Arena, he'd be a second tenant and getting a worse lease deal, and he'd be at best the third or fourth major sports team in the area and unable to charge what he gets for tickets here.

Seattle isnt a legitimate option, it's a boogeyman brought out to threaten people who dont realize the situation has changed since Pocklington owned the team. Katz is likely better off in Edmonton paying twice what he is now committed to than he would be moving to Seattle.

Except he would probably get a free lease agreement and not have to put any money into the arena. He could also work out a deal where he gets all parking and concessions from the games something Northlands currently gets. He would also have a huge population to draw from when you consider a lot of the lower mainland would probably also support the team. Sure he might take a hit in the first 5 years but in the next 30 years Seattle is by far a better market to grow a team then Edmonton. It is a very real possibility IMO if Edmonton will not help fund an arena.

Except he would probably get a free lease agreement and not have to put any money into the arena. He could also work out a deal where he gets all parking and concessions from the games something Northlands currently gets. He would also have a huge population to draw from when you consider a lot of the lower mainland would probably also support the team. Sure he might take a hit in the first 5 years but in the next 30 years Seattle is by far a better market to grow a team then Edmonton. It is a very real possibility IMO if Edmonton will not help fund an arena.

We're not comparing with the situation now so what Northlands gets doesnt matter, he's getting everything in the new deal. The question is whether he's better off paying more than what he is in the new arena deal and staying in Edmonton or moving to Seattle.
Say Katz pays the whole $55 million shortfall is he better off staying in Edmonton or moving to Seattle. Clearly he's better off in Edmonton.

Just look at the average ticket prices. Edmonton is charging almost $80 a ticket on average for tickets to the Oilers. At best he'll be able to charge around $50 as an average in Seattle. $30 per ticket at 18000 seats for 40 games is close to $22 million per season without any playoff games. He also gets all non game day revenue in Edmonton which he wont in Seattle. Even with the difference in market size he'll get more for TV revenue in Edmonton then he's likely to get in Seattle. I didnt even mention attendance, over that 35 year deal he's much more likely to sell more tickets in Edmonton than he is in Seattle. Some good markets in the states do well but not all of them. Even championship teams like Anaheim, Colorado and Carolina dont guarantee a long term fan base in american cities.

Katz still comes out ahead if he pays the full $55 million shortfall than he would moving to Seattle. If he wants to move the team it has to be to Markham/Hamilton/Toronto2 or sell it.

We're not comparing with the situation now so what Northlands gets doesnt matter, he's getting everything in the new deal. The question is whether he's better off paying more than what he is in the new arena deal and staying in Edmonton or moving to Seattle.
Say Katz pays the whole $55 million shortfall is he better off staying in Edmonton or moving to Seattle. Clearly he's better off in Edmonton.

Just look at the average ticket prices. Edmonton is charging almost $80 a ticket on average for tickets to the Oilers. At best he'll be able to charge around $50 as an average in Seattle. $30 per ticket at 18000 seats for 40 games is close to $22 million per season without any playoff games. He also gets all non game day revenue in Edmonton which he wont in Seattle. Even with the difference in market size he'll get more for TV revenue in Edmonton then he's likely to get in Seattle.

Katz still comes out ahead if he pays the full $55 million shortfall than he would moving to Seattle. If he wants to move the team it has to be to Markham/Hamilton/Toronto2 or sell it.

He wouldn't have to invest 200M into the arena as well as operating costs. 200M would take a long time to make back... Just saying

So sick of all this. Just build it already. Originally I had thought that Katz should contribute more/make up the shortfall. But at this point I don't even care where the money comes from. As a simple fan, all this equates to is less years that I am going to be able to enjoy a winning franchise in a new barn. And none of us are getting any younger.

I would like to know what portion of my tax dollars (all branches) get spent on things that I will never use, have no interest in, or don't have the means or prerequisites to take advantage of. And I would like to know what demographic I am in, and what percentage of total tax contribution that demographic is responsible for. Something tells me that while I am in the top contributor category, my wants/needs/uses for public dollars are in the minority when it comes representation and spending. And I'm sure I'm not alone here.

From my perspective, it would be nice to see some public money go to something that I want and can/will use. I know this all sounds very shortsighted, and of course there are other things on my particular list of priorities for public funding, but that is all for another discussion and this is the topic at hand.

I have supported a losing product in that ****hole that is the coliseum for long enough. This is starting to feel like our own little version of the lockout, and its embarrassing. Get it done already.

He wouldn't have to invest 200M into the arena as well as operating costs. 200M would take a long time to make back... Just saying

He'd be paying it over 35 years so he has plenty of time and as I pointed out he'll easily make it up in hockey revenue alone before we even get in to the concert business and other major events, naming rights and the full concessions he is definitely getting here and may or may not in Seattle.

I was living in the Downtown eastside if Vancouver when GM place was built (yes I know technically it is in down Vancouver--most where it is located is on the eastside) and the building kicked off a huge renovation of the entire era and created jobs that were not there before.

My guess is, that Northlands and the city are still trying to work the deal to build the arena out near Northlands and have Northlands own and run it and Edmonton pay rent.

For me Northlands is a Dinosaur that has not kept up with modern times

__________________
"If the Detroit Red Wings are defying gravity" by consistently contending without the benefit of high draft picks, "the Edmonton Oilers are defying lift.

He'd be paying it over 35 years so he has plenty of time and as I pointed out he'll easily make it up in hockey revenue alone before we even get in to the concert business and other major events, naming rights and the full concessions he is definitely getting here and may or may not in Seattle.

It would take him at least 10 years to make 200M if theres an average ticket price difference of 30 dollars. In 10 years I can almost guarantee Seattle would be a better hockey market then Edmonton because of the surrounding population and their proximity to the Canadian border.

I was living in the Downtown eastside if Vancouver when GM place was built (yes I know technically it is in down Vancouver--most where it is located is on the eastside) and the building kicked off a huge renovation of the entire era and created jobs that were not there before.

My guess is, that Northlands and the city are still trying to work the deal to build the arena out near Northlands and have Northlands own and run it and Edmonton pay rent.

For me Northlands is a Dinosaur that has not kept up with modern times

Eh? Not sure where this comes from the city has agreed on a and spent lots of time and money on the downton arena and have essentially tried to cut Northlands out of the whole deal.

Northlands may be a dinosaur as far as glitzy hockey rinks goes but in the grand scheme of building age it is not at all old for a large building/infrastructure.

So sick of all this. Just build it already. Originally I had thought that Katz should contribute more/make up the shortfall. But at this point I don't even care at this point where the money comes from. As a simple fan, all this equates to is less years that I am going to be able to enjoy a winning franchise in a new barn. And none of us are getting any younger.

I would like to know what portion of my tax dollars (all branches) get spent on things that I will never use, have no interest in, or don't have the means or prerequisites to take advantage of. And I would like to know what demographic I am in, and what percentage of total tax contribution that demographic is responsible for. Something tells me that while I am in the top contributor category, my wants/needs/uses for public dollars are in the minority when it comes representation and spending. And I'm sure I'm not alone here.

From my perspective, it would be nice to see some public money go to something that I want and can/will use. I know this all sounds very shortsighted, and of course there are other things on my particular list of priorities for public funding, but that is all for another discussion and this is the topic at hand.

I have supported a losing product in that ****hole that is the coliseum for long enough. This is starting to feel like our own little version of the lockout, and its embarrassing. Get it done already.

It would take him at least 10 years to make 200M if theres an average ticket price difference of 30 dollars. In 10 years I can almost guarantee Seattle would be a better hockey market then Edmonton because of the surrounding population and their proximity to the Canadian border.

But he's spending the 200 million over 35 years so he's way ahead if he makes it up in 10. There's no way you can guarantee Seattle will be a better market than Edmonton. Surrounding population means little otherwise there would still be an NHL team in Atlanta and Pheonix wouldnt be on the verge of moving. Being close to the Canadian border probably helps but it's no guarantee and Seattle is not so close to the Canadian border that it will benefit like Buffalo does with the Leafs.

Does 600M + interest really need to be paid for a few extra seats, a new ice plant and a less ghetto location? Was the construction of rexall in that area not supposed to help rejuvenate the area? How did that go?

How long did yankee stadium last, or maple leaf gardens, or the forum in montreal? Is financial responsibility being trumped by shiny and pretty?

I understand some tax breaks or land deals, but I don't get financing a private business especially when the facility already exists and works fine. I don't understand how the leaders of the province feel about the example they set for their citizens but not being fiscally responsible for the future is not exactly what people would vote for.

I find rexall place is too ugly of a building to beautify an area. Sure it was modern at the time, and in line with every other brutalist architecture design, but now people are looking back and saying wow those are some ugly designs in the 60's-70's (for most buildings), while the timeless brick buildings of the 20's are still admired. Maple Leaf Gardens is a very nice building where the design stood the test of time, and isn't described as something ugly.

The current architectural trend is probably glass and shiny buildings with reflectivity (as evidenced by most new sky scrapers having a glass wall surrounding it), but how long with this trend last before people decide its ugly?

Too late to say this now, but if the city really wanted an iconic building, they have to build it with an architectural design that can withstand the test of time and surpass popularity trends, like neo-classical or neo-gothic designs.

Does 600M + interest really need to be paid for a few extra seats, a new ice plant and a less ghetto location? Was the construction of rexall in that area not supposed to help rejuvenate the area? How did that go?

How long did yankee stadium last, or maple leaf gardens, or the forum in montreal? Is financial responsibility being trumped by shiny and pretty?

I understand some tax breaks or land deals, but I don't get financing a private business especially when the facility already exists and works fine. I don't understand how the leaders of the province feel about the example they set for their citizens but not being fiscally responsible for the future is not exactly what people would vote for.

Does 600mil allow me to go to the can and get back to my seats before intermission is over is all I want. I'd be greedy and say get another beer too, but that's just pushing it.

It would take him at least 10 years to make 200M if theres an average ticket price difference of 30 dollars. In 10 years I can almost guarantee Seattle would be a better hockey market then Edmonton because of the surrounding population and their proximity to the Canadian border.

What are you talking about?

From Forbes Magazine (Nov 28, 2012)

Canadian NHL teams all seen as profitable. All seven Canadian teams are estimated to have an operating income (earnings before interest, taxes, depreciation and amortization) well in the black. Toronto is seen as the league’s most profitable team, with an operating income of $81.9 million, but Montreal ($51.6 million), Vancouver ($30.4 million), Edmonton ($16.2 million), Ottawa ($14.5 million) and Winnipeg ($13.3 million) all cracked the top-10, and Calgary ($11 million) was pegged as the 11th best-earning team in the NHL. All seven teams are at least eight figures in the black, according to Forbes.

You can't all but guarantee anything. If Seattle were a more attractive market than Edmonton the league would've had a team there ages ago. If you were correct, they would've moved Atlanta to Seattle and not to a smaller city like Winnipeg. I hope you realize they have lawyers, accountants and sports economists at the NHL's offices. Despite some mistakes, they know what they're doing from a financial point of view.

Fair enough, Karl ( ), it certainly does read between the lines like an entitled pro-capitalist post. And I suppose in a way, it is, thought not intentional.

For someone like me, its frustrating to see some of the spending of public funds constantly go to areas that are of no benefit directly, especially when I consider how much I contribute. And then when a project like this arena comes up, and the debate over use of public funds stymies and almost buries the deal for years and years, I realize that my window of opportunity where I have job security, expendable income, lifestyle freedom, ability, health etc etc is closing faster than I would like and its hard not to be a little selfish.

I certainly didn't mean to alienate anyone with my post, I hope it didn't come across that way.

I find rexall place is too ugly of a building to beautify an area. Sure it was modern at the time, and in line with every other brutalist architecture design, but now people are looking back and saying wow those are some ugly designs in the 60's-70's (for most buildings), while the timeless brick buildings of the 20's are still admired. Maple Leaf Gardens is a very nice building where the design stood the test of time, and isn't described as something ugly.

The current architectural trend is probably glass and shiny buildings with reflectivity (as evidenced by most new sky scrapers having a glass wall surrounding it), but how long with this trend last before people decide its ugly?

Too late to say this now, but if the city really wanted an iconic building, they have to build it with an architectural design that can withstand the test of time and surpass popularity trends, like neo-classical or neo-gothic designs.

That said, I wouldn't mind a giant wolverine statue being proposed.

Never did I think my brothers political satire would invade the hockey forums that I read! Yes the guy who proposed this is actually my brother!

Feel if this arena was really essential for Mr. Katz, it would've been started long ago. If he doesn't care (Mr. Katz being the sole beneficiary/controlling 100% of the operating profits) why should the city.

Put it on the backburner and pay no attention to if for a few years and watch his response.

Canadian NHL teams all seen as profitable. All seven Canadian teams are estimated to have an operating income (earnings before interest, taxes, depreciation and amortization) well in the black. Toronto is seen as the league’s most profitable team, with an operating income of $81.9 million, but Montreal ($51.6 million), Vancouver ($30.4 million), Edmonton ($16.2 million), Ottawa ($14.5 million) and Winnipeg ($13.3 million) all cracked the top-10, and Calgary ($11 million) was pegged as the 11th best-earning team in the NHL. All seven teams are at least eight figures in the black, according to Forbes.

You can't all but guarantee anything. If Seattle were a more attractive market than Edmonton the league would've had a team there ages ago. If you were correct, they would've moved Atlanta to Seattle and not to a smaller city like Winnipeg. I hope you realize they have lawyers, accountants and sports economists at the NHL's offices. Despite some mistakes, they know what they're doing from a financial point of view.

Those Forbes numbers are not accurate. And Seattle hasn't even built there new arena yet. All discussion about Seattle is dependent on them building their new arena.